By reducing the value of your end of year stock, you can increase your cost of sales and reduce the amount of income tax that your business must pay.
When shopping at the supermarket, have you noticed how discounted products are often placed on endcaps? (Endcaps are the shelves or racks that cap each end of the long shelves and which are turned perpendicular to the aisles.) While this is vital operational intelligence for supermarket retailers, there’s a metaphoric benefit to how other types of business can use this tactic. But first, in order to deepen the metaphor, we need to understand the factors that make endcap product placement such a useful tactic. It’s obvious this practice persists because it benefits the retailer in some way. How it works…
If you don’t communicate how much your products or services are worth, then you will end up competing on price and making less than you should.
Many business owners cut prices to grow sales, without appreciating how many more sales are actually needed to offset the profitability impact.
Many business owners overlook the cash that is hidden by working capital activities, like debtor accounts and unsold inventory.